BY the end of next year Darlington town centre will have a new leisure complex with a cinema, hotel and restaurants. Business Editor Andy Richardson talks to developer Terrace Hill.

THE champagne flows like pop and there are a few sore heads in the morning after Terrace Hill win a new contract or secure planning permission.

“We work hard, and we play hard,” says Duncan McEwan, the firm’s hale and hearty director of retail and leisure development, who will this month break ground on a £30m site that it tipped to revitalise the evening economy of Darlington town centre.

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The flagship Feethams Leisure complex, adjacent to the Borough Council offices, will include an 80-bed Premier Inn hotel and a nine-screen Vue cinema, which is due to open in time to show the 2015 Hollywood Christmas blockbusters.

A number of restaurant chains have signed up to the development, including chicken restaurant Nandoos, Italian eatery Prezzo and Hungry Horse, a food-based pub chain owned by Greene King.

Also on board is gourmet burger restaurant Purple Pig, which was founded in Yarm, and Chinese Buffet, which will open its first outlet in the North-East after success in West Yorkshire and Lancashire.

In other words, there will be plenty of new venues for Mr McEwan and his colleagues to celebrate their next big deal.

The Darlington development will raise the profile of Terrace Hill in the town. But the development company, which has strong links to the North-East, has already helped to reshape the regional landscape.

Sainsbury’s supermarkets on Salters Lane, Sedgefield and Riverside Road, Sunderland and an Asda in Skelton, east Cleveland, will soon be followed by Terrace Hill’s development of a new Sainsbury’s beside Middlesbrough FC’s Riverside Stadium. Work is due to start on that site, the gateway to the Middlehaven regeneration area on the banks of the River Tees, which will include a Martson’s pub, KFC and Costa coffee outlets.

Terrace Hill’s development of land at Tindale Crescent in Bishop Auckland led not only to a new Sainsbury’s store, but also to a smart new £1m stadium for the town’s football club, which later became temporary home to Darlington FC when Quakers were forced to seek refuge outside of their home town.

Mr McEwan: “We had originally earmarked the site for B&Q, but as the recession started to loom the DIY market slowed down.

“Bishop Auckland had never been on Sainsbury’s list of sites for consideration before we spoke to them,” says Mr McEwan, who joined Terrace Hill in 2003 having worked for MacDonald Estates and Miller Development in Scotland. “But we convinced them that the town and the surrounding area was ideal for reaching their customer demographic across Teesdale. It is now one of their best performing stores,” he adds.

“The relationship with Sainsbury’s that we have developed here in the North-East has built up a level of trust that led to us building their stores at Helston in Cornwall - at the time the most southerly foodstore in England, and Heaton Park, Manchester, which is the largest Sainsbury’s in the north."

Mr McEwan, who leads a project team of Simon Hawkins, development director, Richard Hepworth projects director and Paul Spensley projects executive at the firm's Stockton office, adds: ““There is no doubt that the big four supermarkets are under increasing pressure from budget retailers. There are signs that they are concentrating more on smaller stores and there are noticeably fewer major developments under consideration.”

The company founder, oil entrepreneur Robert Adair, notes that there remains healthy demand from all the main grocery retailers for the right-sized store in the right location.

The market is challenging. In its latest results Terrace Hill blamed a "quiet" trading period in the six months to March 31 which resulted in revenue dipping from £38.8m to £10.4m. Those results came shortly before the firm struck a merger deal with Urban & Civic plc, to create a regeneration-focused property company.

The deal forced Terrace Hill to exit the AIM and the newly merged business joined the stock exchange and issued a £170m share offering to raise funds for new development and land acquisitions.

Urban & Civic boss Nigel Hugill became executive chair of the combined company, with Terrace Hill’s chief executive Philip Leech becoming property director.

The enlarged company works under the Urban & Civic name, but Terrace Hill has retained its separate identity.

Richmond, North Yorkshire-based Mr Adair, said: “This powerful new combination represents a transformational and exciting step forward for us. I could not have wanted for a better and more promising outcome.

“As local economies and real wages outside central London begin to recover, the new business has good momentum and an excellent and skilled, combined management team to take us forward.

When Mr Adair launched Terrace Hill in 1986 its initial focus were office developments.

Sites in London were followed by the development of Hylton Retail Park in Sunderland and Teesdale Business Park in Stockton, where Terrace Hill opened its North-East regional office in 1994.

Among the firm’s commercial property work in the region was the construction, funding and sale of the Northern Design Centre at Baltic Business Quarter in Gateshead; and the sale of the Hudson Quay office development, which had been let to Middlesbrough Primary Care Trust on Teesside.

More recently, the changing retail market has seen Terrace Hill take its expertise into developments which combine shopping and leisure facilities. Hence the scheme in Darlington and similar site in Burnley.

Amid competition from out-of-town sites, how does Mr McEwan view the future for beleaguered town centres?

“They have a place, there is no doubt about that, but the business owners in the town need to work together to present the customer with a more complimentary, coherent offer. Shops in town centres often think about competing with one another. But when you look at a shopping centre, you will have malls dedicated to certain types of products side-by-side: fashion stores, sports shops, acting in concert to bring a consistent offering to their customers. Town centres must adapt to that challenge or people will jump in their car and drive to the Metrocentre.

"This is where councils can play a lead.

"Investment in town centres is crucial to ensure they remain relevant.

Mr McEwan adds: “Feethams will bring jobs to Darlington and people into the town, particularly on an evening. The leisure facilities alone will employ 150 people. The build will create hundreds of direct and supply chain jobs.

"Our philosophy is to use local partners. Once we have a relationship with someone whom we trust, and they get to know our way of working, then we like to keep working with them.”

The firm has long-standing relationships with the likes of North-East planning consultants NLP, Mayer Brown highways consultants and architects Lister Associates and Niven.

Mr McEwan says: “When we celebrate a contract win, or planning permission we do it with our consultants too. The role they play is crucial. The rule is that when we enjoy success we do it together.”